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Chapter 5

Chapter 5 Ethics_and_Corporate_Social_Responsibility_Study_Notes.docx

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Arts and Business
Robert Sproule

Ethics and Corporate Social Responsibility Module Study Notes Ethics is more than legality What can be done to restore trust in the system?  Laws don’t make people honest, reliable and truthful  Those who break the law should pay the consequences  Problem with laws makes people think that all behaviour within the law is acceptable  Legality v. ethics  two different things Legality is laws we have written that protect us from fraud, theft, and violence. Ethics are the standards of moral behaviour  Integrity, respect for human life, self-control, honesty, courage, self-sacrifice  Many unethical behaviour is legal  Ethical behaviour needs to be exhibited in our daily lives There are no easy solutions to ethical dilemmas.  trade-offs between what is ethical v. personal or professional point of view (must choose between equally unsatisfactory alternatives) Questions to consider when facing an ethical dilemma – 3 ethics check questions  It is legal - in terms of a law or company policy  Is it balanced – win/lose decisions, will I win everything at the expense of another  How will it make me feel about myself if I told – my family, friends, supervisor, clients (have I been warned not to disclose my actions - corrodes self esteem) Styles of recognizing and resolving ethical dilemmas (Figure 5.2 on page 146)  ethics of justice (principles) or fundamentalist model- justice, fairness, equality, authority (loose site of immediate interests of individuals)  ethics of care or basic human rights model- reduce harm or suffering, solutions based on individual circumstances (loose fairness as decisions may be arbitrary) Managing Businesses Ethically and Responsibility People learn their standards and values from observation, not by what people have taught them. Therefore, ethics start at the top – employees learn from their employer. Trust and co-operation between employees must be based on fairness, honesty, openness, and moral integrity for several reasons:  maintaining good reputation  keeping existing customers and attracting new ones  avoiding lawsuits  reducing employee turnover  avoiding government intervention  to do the right thing Code of Conduct is the central guide and reference for decision making, with mission statements including:  open disclosure of how an organization operates  provides guidelines for behaviour  topics include: commitment to employees, standards for doing business and relationship with the community  encourages discussions of ethics to improve how employees deal with ethical dilemmas  creates a positive public identity creating a supportive political and regulatory environment and increased level of public confidence and trust Setting corporate ethical standards Compliance-based codes of conduct emphasizes preventing unlawful behaviour by increasing control and penalizing wrongdoers  based on avoiding legal punishment  Ideal – conform to external standards like laws and regulations  Objective – avoid criminal misconduct  Leaders – lawyers  Methods – education, reduced employee discretion, control, and penalties Integrity-based codes of conduct guides values, supports ethical behaviour, and shared accountability  Ideal – conform to external standards like laws and regulations and specific internal standards  Objective – allows responsible employee conduct  Leaders – managers with aids of lawyers and others  Methods – education, leadership, accountability, decision processes, controls, penalties 6 steps to improve business ethics: 1. Top management adopts and supports a corporate code of conduct 2. Employees must understand that expectations for ethical behaviour start at the top and is expected to act accordingly 3. Managers among others are trained to consider ethical implications of all business decisions 4. Ethics office is set up – protects whistleblowers, etc.  Whistle-blowing legislation in Canada – exists at the federal and some provincial levels to protect public sector employees  Minimal protection for whistleblowers in private industry and yet employee tip offs uncover far more fraud then internal audit (remember this topic from the Finance module) o protection of whistleblowers only applies to good faith allegations 5. Outsiders are taught the ethics program. 6. Ethics code enforced to show seriousness. (The most critical) It is important to choose an ethic officer that has various responsibilities including confidentiality, investigations, fairness. Frank Bucaro’s four words:  can’t – is the wrong focus for codes of ethics  boredom – another consequence of negatively framed codes of conduct  failure – logical consequence that should be applied to unethical behaviour  problem – is the wrong perspective
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